Royal Caribbean Cruises (NYSE:RCL) delivers shareholders solid 32% CAGR over 3 years, surging 9.4% in the last week alone

Simply Wall St · 10/15 10:49

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Royal Caribbean Cruises Ltd. (NYSE:RCL) share price has flown 129% in the last three years. How nice for those who held the stock! It's also up 17% in about a month.

Since it's been a strong week for Royal Caribbean Cruises shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Royal Caribbean Cruises

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Royal Caribbean Cruises became profitable within the last three years. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
NYSE:RCL Earnings Per Share Growth October 15th 2024

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

We're pleased to report that Royal Caribbean Cruises shareholders have received a total shareholder return of 127% over one year. And that does include the dividend. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Royal Caribbean Cruises has 3 warning signs (and 1 which is concerning) we think you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.